Want to Make Money in the Music Business? Go Live. Again.

Radiohead

Photo by rula — Creative Commons License Some Rights Reserved

If music be the food of love, who’s buying?

This past week, Radiohead launched a new business model for the music biz with the Newspaper Album. Recently, N-Dubz was featured in the news for using gaming as their cash generator. Every one in the music industry is listening for the trends and looking at the numbers.

For most of music history, companies and artists made money from live performances and the sale of sheet music. Technology brought a revolution to the music revenue model when recorded music became easier to make, distribute and sell.

As posted in his blog, The Understatement and in the Business Insider, Michael DeGusta pulled together some of the key facts and figures on the music industry’s recording business from 1973 through 2009. His charts show an industry in decline. Finding profits in recorded music is no longer a viable and sustainable business model.

What are the keys? Using sales figures from 1973 through 2009, the music industry has come down 64% from its peak, and down 45% overall from 1973.

CD sales provided only a short term flurry of revenue. (Remember, too, that the profit margins on cds were significantly higher than they were from the production costs associated with vinyl.)

In 1999, Americans spent on average three times more on recorded music then they do today.

While everyone seems to be downloading singles today, these sales are nowhere near enough to make up for the industry’s losses in other areas. The industry’s business model was designed around selling albums, and still is. However, fewer and fewer of us are buying albums. We now average about one per year.

Here’s the good news. Since 2006 when we began to track festivals and their audiences, the number of festivals and audiences continue to increase. The festival business continues to grow not just in music, but across all sectors of live events.

The growth in the music business is in the live event. Festivals appear to be at the forefront of creating bang-for-the-buck experiences and creating different approaches to mixing new artists with the tried-and-true. As festivals continue to grow, it may be the one area where the music industry and the artists can see a return on their investment and reach new audiences.

The music industry isn’t dead. It’s going live. Again.

- Bill Reichblum

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3 Responses to “Want to Make Money in the Music Business? Go Live. Again.”

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