Music industry needs new advertising methods

Silvino Edward Diaz

American music needs a new business model. The sharp rise in piracy over the past decade has left the industry disfigured; like a dog without a leash, it has been scavenging aimlessly, seeking an answer, yet only finding each failure to be more bitter than the last.

The International Federation of the Phonographic Industry estimated 30 billion illegal downloads in the U.S. for 2007. With this volume of illegal file-sharing, not even the rising numbers reported for digital singles and ringtones have stand. In 2000, Americans purchased 785.1 million albums; in 2007, they only bought 588.2 million, with album sales dropping 25% from 2006 to 2008.

“The record business is over” says music attorney Peter Paterno, who has represented artists such as Metallica and Dr. Dre. “[Record] labels have wonderful assets; they just can’t make any money off of them,” he adds.

Ever since the 1920s, when phonograph records replaced sheet music as the industry’s primary revenue source, music has been purchased both in sets – full length albums or smaller-length EPs – and in singles. Every entity along the industry’s value chain, including artists, producers, distributors and retailers, would get its respective share out of the sale of music in physical copies. But, in the advent of Napster, this chain has crumbled. Since 2000, more than 5,000 record-company employees have been laid off, and more than 2,700 record stores have closed across the United States.

Music is not a physical commodity anymore. Today, music is acquired mostly in the form of digital purchases, peer-to-peer file sharing, ringtones, as well as streaming online and satellite radio.

The consumer has more access to music now than ever before; however, the suppliers of the music are worse off than ever. Without a solid revenue stream, like the one provided by album sales, the industry must depend on what it used to deem as secondary profit centers: concert bookings, TV/film appearances and endorsements. These are hardly enough.

So what must the industry do to survive? How can the industry overcome, or at least capitalize on, a consumer savvier than any copyright technology and who believes that music is not worth paying for anymore? The answer: call upon the grace of the almighty savior of media and entertainment – advertisement.

Advertisement is the engine of modern consumer culture – it penetrates every thread of its fabric, from tattooed sponsorships on the backs of boxers at Las Vegas bouts, to location-based “Bluetoothing,” which sends promotions to devices near host stores via Bluetooth signals.

What we are witnessing now is the rapid convergence of music and advertisement. Although this mix is by no means breaking news, since both industries have maintained a symbiotic relationship from as far back as when the Vick’s Vap-o-rub Quartet appeared on radio spots in the late 1920s, 21st century innovation will continue to exponentially streamline fan experience.

Not having the comfort of consistent album sales revenue anymore, artists and labels are now forced to disseminate their product in every way possible.

For example, R&B superstar Usher recently partnered with Sony Ericsson to promote his latest album “Here I Stand.” According to the Washington Post, “the mobile-phone maker has picked [Usher] to market its Sony Ericsson’s Walkman music phones in the U.S., Canada and 20 European countries.”

And on a similar note, R&B colleague Chris Brown partnered with Wrigley’s Doublemint Gum to promote his single/jingle “Forever” in July of 2008; however, the brand has since halted the campaign due to Brown’s recent domestic abuse charges.

But one of the most popular campaigning techniques, especially by major labels, is promotion through TV programming. HBO’s series “Entourage” has become one of the most successful ad channels. Artists like Cold War Kids and Kanye West have used the series’ end credits to debut singles from their productions “Loyalty to Loyalty” and “Graduation,” respectively. The series has garnered much acclaim for its soundtrack listings, which include tracks from artists such as Daddy Yankee, T.I. and Gnarls Barkley.

However, the single-most robust advancement in advertisement in music is yet to be seen – the so-called Messiah of the industry.

When looking at both industries today, two assumptions can be made. The first: advertisement is reach; but it is also funding. The second: in less than a decade, all music will be free due to swifter peer-to-peer technologies. The coercion of these two notions will bring forth the future of popular music – ad supported albums and singles.

Imagine downloading Radiohead’s most recent album “In Rainbows,” the first album from a major recording artist to be released free of charge, but instead of downloading it from the band’s website, you download it from Coca-Cola’s, for free. This is the future of music.

Advertising has the capacity to gather resources that cannot be attained through other means.

With sluggish album sales and high piracy, there is no profitability in selling music. The industry has been slow to adapt to the new wave of technologies brought forth by the arrival of the Internet.

Billboard Charts director Geoff Mayfield says, “The business has changed. In the 1970s, albums drove the market, replacing singles. With the advent of digital music, we went in the opposite direction. Not only are people buying individual songs again, but there’s a much broader spectrum of songs available.”

Ad supported music will give in to a new era of music where singles will rule the atmosphere and the consumer will get what he or she wants, free of charge, and without the dangers that malware brings through bit torrent downloads. The industry, on the other hand, will adopt a business model that basically pays for itself. Everyone wins.