O J Way Oren Rosenthal Austin,TX

The Record Business Becomes the Music Business

Posted in Uncategorized by OJWay on February 10th, 2010 permalink

I’ve just seen an article that explained changes in the music business better than any other analysis out there (and I’ve seen plenty!) At first I was surprised that I didn’t read it in the New York Times, Rolling Stone, Spin, or Billboard - it was in the Wall Street Journal. But now I realize that makes perfect sense, because I often confuse music with the music business.

The big change is that music income is being viewed holistically, and this is called the 360 model. In the old days, record deals covered music sales, and tours were subsidized as promotional efforts to support record sales. The new deals cover music sales of course (and they predict that this year revenue from digital sales will surpass physical sales), but now touring, merchandising, licensing, and even corporate sponsorships are all part of the mix. Concerts are now a major revenue stream. I pulled some of the data from the article, the accompanying graphic, and other sources to break down the changes to the business models.

Old Model (1999)

Dying Model (2009)

New Model (2009)

#1 album in physical units: Backstreet Boys “Millenium”, 9.4 Million

#1 album in physical units: Taylor Swift “Fearless” 3.2 Million

Top Selling Digital Track: Black Eyed Peas “Boom Boom Pow” 4.7 Million units

Top Selling artist in physical units: Michael Jackson, 8.3 Million

Top Selling Digital Artist – Lady Gaga, 15.3 Million units

Susan Boyle – 133,000 MySpace plays.

Lady Gaga - 321.5 Million MySpace Plays

Average concert ticket price: $36.84 ($47.18 adjusted for inflation)

Average concert ticket price: $62.57

Total album sales (units)

754.8 Million

Total album sales (units)

373.9 Million

Total revenue from digital channels: $4.2 Billion

Bruce Springsteen Born in the USA – 15 Million album sales

Bruce Springsteen “Working on a Dream” album sales: 546,000 album Sales

Bruce Springsteen “Working on a Dream” tour: $156 Million gross

So, to get from the music business back into the music, the article raves about Lady Gaga and says she could be the next Madonna. I think she is. And if you check out this clip from before she was Gaga, when she was Stefani Germanotta, you’ll see the biggest difference may be that Gaga has a whole lot more musical talent.

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