The Optimistic View on the Smaller Music Industry
Everyone always talks about how much less money the music industry makes now. Hit albums are on a dramatic decline. The challenge is apparently to try to get the number of people buying albums back to historical levels.
Transactional listeners are the ones that made albums hits.
This is the wrong focus. The industry has completely shifted and thatâs okay. Recorded music has been a free commodity since Napster was introduced, but artists and labels are really only losing out on one type of listener. The focus for every artist should be on developing an engaged fan base that cares about you. This doesnât happen overnight.
There are two types of music listeners: transactional and engaged. Both of these listeners have much improved experiences now, but for very different reasons.
Historically, the transactional listener had a few options if he wanted to enjoy a hit single on his own time: (1) He could check the radio frequently and record off the radio onto a tape to listen to at his leisure (although, I doubt too many people outside of myself had the patience for this) or (2) he could purchase the full album from a record store.
For the transactional listeners that only ever cared about the single, the music industry was extracting an exorbitant price per âsongâ sold, since the industry essentially was only selling one or two songs per album to that listener. The rest of the album didnât matter and the listener would only purchase the next album if it contained another hit single. These are the people that will go to a concert to hear the one hit song.
If the listener was an engaged listener, then the listener bought the album, scoured the liner notes for easter eggs, listened intently to each song, and had an emotional investment in addition to her monetary investment. If the album sucked, then the purchase was regarded as a mistake and the next artistâs next album wasnât purchased. If the album was great, a relationship was formed and the artist could rely on these fans to buy future albums, go to shows, and buy merchandise.
Today, the music industry is hurting because the value an artist creates lies in the relationship that is formed with his or her listeners. The industry was great at capitalizing on hit singles by extracting an oversized purchase from transactional listeners. This is no longer possible, which is great for the transactional customers.
The engaged listener has never had it easier to find artists to care about. There are a plethora of sites (Turntable.fm, Pandora, Spotify, Rdio, Facebook Music, YouTube) that make it easier than ever to discover new artists. Engaged listeners can listen to an artistâs discography for free and watch YouTube videos and determine whether they find the artist engaging. If they do, they have more money than ever to invest in the artists they care about because they havenât wasted money testing newer artists. Engaged listeners just need the opportunity to support the artist through album pre-orders, tours (if the artist doesnât tour to their city, that is lost revenue), etc.
The artists that are succeeding at this (like Amanda Palmer, Radiohead, of Montreal, Lady Gaga, Kanye West, Girl Talk, Pomplamoose) are doing well because, in addition to high quality music output, they engage fans by packaging their products in unique ways, asking for direct support, coming up with unique or quirky products, or taking on personas that people talk about.
The casual fans can either listen for free or purchase the popular song they like, but there is no chance of turning these fans into engaged listeners now. The engaged listeners have continued to show support over the past decade. It should be every artistâs goal to create an engaged fan base because thatâs where the value is.
Artists have every opportunity to succeed in todayâs environment, but they must develop engaging relationships with their fans. Give listeners a reason to care about you and they will. It has never been easier to get your music out there. You just have to give people a reason to care.
The record industryâs model is broken because they have to create these fan bases over time and donât get the cash infusion from transactional, casual listeners on a debut album just because a song is popular. The industry has shrunk simply because it was right-sized by the internet. The industry can no longer take advantage of transactional listeners and there is nothing wrong with that.
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