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The six laws of the new music business

Last week, I talked to John Schaefer of WNYC's Soundcheck about the cannibalization effect that digital downloads can and do have on CD sales. Today, the New York Daily News has a piece on just that, and the approach some labels are taking to the problem. They wring their hands and wonder, should popular singles even be available on-line? Or should record execs hold back the popular singles in order to encourage CD purchases?

No one likes to face hard facts, but these six rules for the new music business are simple. If you're a record executive, listen up.
  1. Yes, you must make digital singles available. If you don't, you'll be opening the door to anti-competitive practice lawsuits that have the potential to end your cartel. At the very least you'll be supporting piracy as the consumer is done paying upwards of $15 to have that one hit song (see rule #3).
  2. Your competition (the minor labels and independent publishers) knows just how vulnerable you are, and they are poised to take you down. Becoming more nimble, savvy and aware of your consumer is your only hope for long term survival.
  3. Single hit artists are single serving artists. You won't see platinum album sales from one-hit wonders anymore. Learning this lesson early, and defining the ways to exploit these single serving artists properly is key to maximizing revenue. (i.e. properly doesn't mean taking the single off the market and forcing people to buy CD's. If you're confused, see rule #1)
  4. You're going to have to work harder, and produce more quality product in order to turn the same revenue. Get over it. Most industries are already ultra-competitive, and you're finding out now how it feels to join the club.
  5. Strong artists can afford to give away a song or two. Doing so will encourage whole album sales. Offering free, No-DRM versions of deep album cuts from your best of breed artists will increase your bottom line, not reduce it.
  6. The answer to your problems isn't in the form of lawsuits and lobbyists. You can only hold back the dyke so long before it bursts around you. Better use your time now learning how to swim, rather than trying to keep from getting wet.
I know it hurts guys, it's never fun when a party comes to an end. Following these 6 rules, you'll live to party again and, you'll be a leaner, stronger animal for the sacrifice.

[via New York Daily News]

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