One of my good friends – we’ll call him MJ to protect his alleged innocence -- manages a chain of
independent record stores in the Pacific Northwest. Over dinner last week, MJ lamented that the
industry he’s loved and catered to for the last 20 years had changed so dramatically that he could no
longer find a way to serve his customers profitably. His story was no Chicken Little lament. His sky
isn’t falling – his entire world has flipped upside-down and hit him on the head. The writing was on
the wall as early as seven years ago with a steady decline in compact-disc sales. But in the last six
months, his revenue declined by more than 20%. It seems that in an iPod world, record stores are
selling buggy whips.
According to MJ, 85% of the world still buys CDs, even if they then turn around and burn them on
their computer and file-share them with friends. In fact, his used CD business is up in profitability. But
the steady decline of CD sales is pushing specialty music retailers of the map. Last year, the giant
Tower Records closed 89 stores. Nearly 800 more closed in 2006 along with them. With fewer stores,
the big box retailers like Wal Mart and Target have more leverage to drive prices down even further.
Unfortunately, downloads haven’t caught up to the slip in CD sales and the close of specialty stores.
You can find music online from any number of sources – kosher or otherwise. It is estimated that over
one billion songs are traded illegally through file-sharing and peer-to-peer music sites every month.
While the media hypes piracy, and certainly piracy is an issue for today’s musicians, many fans
consume music from legal sources like Apple’s iTunes, MySpace downloads or Sirius satellite radio.
Even bloggers are in on the action with downloads and podcasts featuring some of the best new
music.
Many recording labels have complained that CDs have turned into marketing pieces for concerts and
merch. MJ says that none of the major labels are planning big marketing pushes for the December
season of gift giving. No more posters, giant cut-outs, wrapping paper and other promotional items
pushing CDs. There is no more money left for the labels in CDs, but there is value in it for the artist in
terms of marketing and driving the band’s brand.
Today’s chart-topping releases equate to roughly 60,000 copies in their first week. Most independent
musicians only dream of that many sales. Yet, only two short years ago, it was common for top
releases to sell 500,000 or more copies in their first week. The big releases are faltering. This could be
good news for the independent musician. There is more room for profitable independent releases and
CD sales at concerts. Perhaps the dream of an independent was once to sell 100,000 copies of their
latest release is now to sell 15,000 copies. But an artist on their own label might make $10 per album
compared with $1 on a major release. $150,000 for selling 15,000 CDs on a tour still sounds pretty
great to the average musician.
So how can a rock band make money these days? It’s still quite possible and in fact might be even
easier to find your niche in such a fragmented market. Here are some quick tips:
Plan tours, concerts and other performances. Book your own gigs and don’t turn down the state fair.
Sell a lot of merch on-site. Expand into more than just CDs, although the one place that CDs still sell is
at concert venues. Get your own t-shirts, posters, tennis shoes, underwear, books, combs, iPod
covers, travel mugs, guitar picks and whistles to sell at shows.
Embrace new technology. Why not offer your own downloads and by all means, get your music on
ITunes. Learn podcasting. Reach out to the blogosphere.
Look at alternative places to get your music heard, like local advertisements, co-op giveaways, schools
or licensing.
It’s not such a bad thing that Norah Jones isn’t selling as many copies of her latest CD. There’s more
money on the table for you and less noise to cut through to get heard.