Thursday, August 16, 2007

Music: back to tangibles

The Economist sums up a story on the record labels’ new business model with an Edgar Bronfman quote: “The music industry is growing. The record industry is not growing.”

It seems the labels have decided that they need a cut of more than just a band’s CD sales; their new contracts include live music, merchandise, and endorsement deals.

Just as the old instincts for relationships and reality have driven the pet industry to generate more revenue than media (see my post Animal Instincts) tangibles are reasserting themselves in the music industry. The Economist, citing the Music Managers Forum trade group, reports that seven years ago, record-label musicians derived two-thirds of their income from pre-recorded music, with the other one-third coming from concert tours, merchandise and endorsements. Those proportions have been now been reversed. For example, concert-ticket sales in North America alone increased from $1.7 billion in 2000 to over $3.1 billion last year, according to Pollstar, a trade magazine.

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