In an industry with ever-dwindling sales and unmet consumer needs, major record labels still don’t get it.
It’s a sad state of affairs these days at the Big Four music groups (Sony Music Entertainment, Universal Music Group, EMI, and Warner Music Group). The music industry as a whole has been hurt by the American recession, and there is little doubt consumers are spending less on everything from physical albums and their digital counterparts to merchandise and concert tickets.
But why does an industry suffering from year after year of shrinking sales refuse to innovate?
The answer: major record labels have failed to learn and practice modern marketing skills.
Example: Warner Music Group’s recent attempt to modernize their marketing efforts by selling advertising space before and after music videos.
Really, Warner? That’s the best you could come up with for your so-called "Web Strategy 2.0"?
In an era with social technologies, pull marketing, and word of mouth marketing taking center stage, revenue from physical album sales (the primary revenue stream of the major labels) is plummeting. The desperation amongst industry insiders is palpable as they realize a fundamental business model change is going to have to happen if the major labels are to survive another two to three years.
Labels need to focus on producing a product that their customers view as high quality at a price point that is fair, and then delivering that product to the channels consumers prefer (digital). That may seem like common sense, but it reflects the way the marketing and advertising industries have dramatically restructured to leverage emerging technology and trends in consumer behavior. Returning to the adage of building a high quality digital product with a good story backing it up is essential for anyone working the business to consumer angle in 2009.
As Nancy Jeffries, head of Creative Development and Licensing at MPL Music Publishing recently shared with me, "Great music, undiscovered, filtered and at great prices is what’s called for now."
Digital Rights Management issues aside, unless major labels get their acts together by hiring in fresh, talented marketers - and taking them seriously - we don’t have much to look forward to from Hollywood in the coming years, nor can we expect to have any kind of say in the low brow, Auto-Tuned, airy music dominating Billboard’s top lists.
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