With CDs, Labels on the Wane, Will MI Play a Bigger Role in Music Promotion?

On May 28th the New York Times prophesied the end of the CD and with it, the death knell for record companies as we know them. It reported that the shareholders of EMI were weighing a plan to sell the company due to the downward spiral of sales. CD sales plunged another 20 percent this year, and in past years have gone down as much as 25 percent. Media industry consultant Aram Sinnreich was quoted as saying that this Christmas will be the last big season for CD sales. After that, the format that has served so well for 24 years will “go kaput.”

According to the NPD Group, a market research company, 37 percent of all music consumption comes from offline ripping and burning —aka “stealing”— among friends.

So it’s no wonder that quickly moving from rumor to fact is that Best Buy will be completely doing away with selling CDs soon (some speculate it’ll be to increase their footprint of music instruments; others say more likely it’ll be to make even more room for video games). Thrown into this mix is superstar Paul McCartney releasing his album through Starbucks and debuting his first video for it on MySpace.com. (His thumbing his nose at his old label, EMI, and going with Starbucks would prove a wise move for Sir Paul: first-week sales were a whopping 160,541 units, a 33 percent improvement over his last solo album in 2005.)

Let’s throw this anecdote in the mix: the popular group White Stripes marked the debut of their latest album Icky Thump last month with a live performance for 200 at Tower Records in Los Angeles. That Tower Records is dead and their performance was on the grave of the international chain’s flagship Sunset Strip store is certainly another sign of the changing times.

What does all this mean the MI industry?
“I remember asking Roy Lott, president of Capitol/EMI Records, about the threat of downloading music a few years ago, and his head was in the sand on the issue,” says music promoter Kevin Lyman. “CDs were overpriced at $16.99 and then overnight, suddenly the music was ‘free.’ We’ve lost an entire generation — an entire generation thinks that [recorded] music has no value. It’s just ingrained in their brain.

“Now we have to show this next generation that music does have value.”

At least kids today are getting used to paying a $1 a song. This new development will hardly justify the $5 million a year record executive salary of yesterday, and likely lead to fewer rock stars flying around on private jets, which is okay, comments Lyman, noting “the music industry will be reestablished as more of a middle-class living.”

MI Industry Called On to Fill the Void
Lyman stood at the Sabian exhibit at January’s NAMM Show, officially there speaking about his partnership with Sabian in a contest to find a new act to win a spot in his popular Vans Warped Tour. During that press conference, though, he threw down the gauntlet and declared record companies dead, and said it will be up to the MI industry — from manufacturers like Sabian and Ernie Ball to independent MI dealers — to step in and fill the void left by record companies.

Lyman started his career booking bands in college, and served as a production manager for seminal punk rock and metal bands including Metallica. Thirteen years ago he created and produced the first Vans Warped Tour, now the longest-running music and extreme sports festival tour in the world (this year he’s being honored by the Rock and Roll Hall of Fame for his contributions). Along with music from more than 70 bands, the tour is a skateboarding festival that feature half-pipes and ramps for skateboarders and bikers. The tour began in late June and continues through the end of August.

“The sense of discovering music is happening at such a rapid pace now,” Lyman says. “Now it’s instantaneous. I can find everything I want to know about a band [online] in five minutes. But that’s why you see bands burning and turning so quickly. Bands used to rise and fall on the Billboard Top 200 for months. Now you’ll see a band enter at 198, then the next week they are in the top 10, then the week after that they’ve fallen off it completely.”

The biggest shift is the relationship to bands have to live performances: 20 years ago, a band would make an album, then go out on tour to get people to buy the album. Today it’s the opposite: the big concerts with increasingly sophisticated lights, video, and special effects – and the big ticket prices that usually accompany all that — are how artists make their money today. Gone are the big publishing advances bands used to get, so they’re being forced to spend more time on the road making money from live shows — which includes selling T-shirts and other merchandise.

Lyman is glad MI manufacturers are stepping in, and is particularly grateful to Sterling Ball of Ernie Ball Music Man, the latter having supported the Vans tour and serving a portal for burgeoning acts almost from the beginning: Comments Lyman: “Sterling taught me a lot about business. He never thinks inside the box — just look at his NAMM display! His program for the Warped tour has been the most successful in finding new bands and supporting new music in general.” Lyman adds that he’s glad Sabian has become similarly involved this past year.

“Last year we were active with the Warped tour, but this year we wanted to be in a situation where we were able to give back on a bigger level as opposed to a strict commercial sponsorship,” says Wayne Blanchard, senior marketing manager at Sabian. “This is a major social musical event in America and the great thing about this tour is it’s a participatory event, and Sabian was able to offer a band the chance to be put on the festival stage.”

Sabian’s “Dream Spot” contest enabled bands to post their songs online. Hundreds of bands entered, with preliminary judging done by Lyman and others affiliated with the tour, magazine editors, and Sabian’s artist relation team. The judges got the list down to a final 10, and fans cast their votes for their favorite bands in June. The winning band will be joining the tour for 10 dates this month [August], and will also receive $10,000 credit for band gear from a participating retailer; a one-year Sabian endorsement for its drummer; and a one-year 3D micro-site on www.cafesonique.com. The winning band was announced June 16, and Toronto-based alt rockers Bombay Doors got the nod.

Blanchard says everyone at Sabian was “knocked out” that Lyman personally wanted to be involved in announcing the Sabian involvement with the Warped Tour at NAMM and appeared at the trade show in January. “Like us, he recognizes something: that to sustain and grow the MI business, we all need to get involved with the customers more than ever. I think many MI companies are getting involved with the public in ways that 10 years ago you wouldn’t or couldn’t even think of.”

Blanchard adds the decline of record companies is part of the equation. “Record companies are in the situation they are in now because they didn’t respond to all the warning signs.”

For Sabian, getting involved with the Vans Warped Tour is more about working for a greater good then any specific cause-and-effect marketing plan. “We never sat down and asked ourselves what we wanted out of this,” Blanchard notes. “The big thing for us is just a demonstration of commitment to players and wanna-be-players.” He says too often the industry focuses on the current players and not those who want to be part of music but haven’t yet taken the plunge.

“When I first started with Sabian 20 years ago, I felt the business was a bit too exclusive for its own good. Everyone worked to appeal to the crème de la crème player, the older, better player, at the exclusion of the younger players and denied the chance for those wanting to play to become enthusiastic about making music. There is a real need for the industry as a whole to be much more inventive.”

The New Role of the Retailers
What this paradigm shift means for retailers is an opportunity (if not a necessity) to get involved in promoting local music beyond just selling equipment or hosting the occasional clinic and battle-of-the-bands.

“I see the independent retail stores becoming more full-service, becoming more of a destination place,” Lyman says. “I see them offering clothes and accessories, allowing more people access to their staff who likely have an abundance of knowledge about the music scene. Even if people are getting most of their music online, they still want the socialization of the old-time record store. If music stores can create that kind of hang place, similar to what skateboarding retailers have done, it’ll be to the betterment of the industry.”

The entrepreneur believes betterment will also come from considering anything and everything, including new possibilities in the distribution of music. Lyman cites a new company, DiscRevolt, as the kind of situation a retailer could experiment with. It’s a company that offers downloading cards — part iTunes-like gift card, part baseball card collectable. With original artwork for bands or retailers on one side, and a code where the customer then logs on and downloads music on the other, it’s a novel idea for distributing music that holds many possibilities for the MI retailer. [See sidebar for further explanation.]

Lyman says this is just one idea that would be a great promotional item for music stores, and a way to position the store as being on the forefront of the music culture. Imagine if with every purchase of $25 or more, for example, the customer gets a free downloading card with the store’s logo and told that it contains access to tracks from the top five guitarists in town. That would be a way to promote the store, local music, and of course win the undying gratitude of those local heroes the retailer is publicizing.

Also, since the clout and deep pockets of the record companies of yesteryear is waning, independent music stores can see what bands are coming into town and set up autograph/meet-and-greet sessions like the kind that used to be staged at record stores. “Labels don’t have the staff to set up in-store signings like they used to, so the musical instrument retailers should do it,” Lyman advises. “No one can be overly aggressive with any of this. There are no rules right now.”

For the music retailer who bemoans that there is no Eddie Van Halen out there, someone that inspires a bunch of kids to go buy guitars, Lyman encourages retailers to “find your own Eddie Van Halen in their own back yard, and use him or her for a vocal point on a local level.”

NAMM is also once again involved with the Vans Warped Tour. Last year, more than 100 NAMM retail members participated in the tour nationwide, gaining exposure to thousands of concert attendees, an average of 10,000 per stop. This year NAMM is building on its success, offering the opportunity for retailers to opt in on promotions including collateral materials in goody bags, promotional ticket giveaways fro members, and a retailer “Wanna Play?” 10 percent discount program. (For more information go to www.namm.org/initiatives/warped-tour-opt-in.)

The Times articled also said that the current situation is potentially causing “a creative drought and a corresponding lack of artists who ignite consumers’ interest in buying music.” Lyman disagrees, at least on one level:

“I think the state of new music is really healthy. We just have to reestablish how you can keep a value to music. I don’t think giving away free OzzFest tickets is the answer.

“But there are a bunch of kids out there ready to jump [into making music]. It’s actually a very exciting time in music … our biggest challenge is staying relevant so we can be part of the new process.”

Drum! Publisher: We Must Create the Demand
Others in our industry are concerned about the changes in the record industry and what it means to those whose livelihood is dependent on kids being inspired to pick an instrument and start to play music.

“I know we have tumultuous trends in the equipment industry, but I believe the major causes lie outside of retailing and manufacturing,” says Phil Hood, publisher of Drum! and Traps magazines. Citing the implosion of the big music companies and the transformation to distribution by digital means, Hood is concerned about the demise of the old model and what it all means.

“Now what do young bands do to break into the music business? Work on your ‘Myspace’ page? Apply to be on American Idol? Call television producers and try to get a song placed?” For Hood, radio has been destroyed as a positive force for new music, and concert ticket prices are priced out of the range of a young kid’s wallet (he points a finger at Clear Channel as one of the causes of both of these shifts).

More often than not, schools hire DJs, not bands, to play school functions and overall young musicians have fewer places to gain performing experience.

“What you see is that the doors that opened for young people in the 1960s through the 1980s to experience modest music careers have been mostly closed,” Hood says. “Further, the quality of audiences for live music diminishes with every school music program that closes and every hit record that features producers rather than musicians.”

Hood is not ready to give up though. The music industry is not dead, not by a long shot:

“It does mean the way combo instruments, recording gear, and other products are developed, marketed, and sold will keep changing. It’s time for this industry to double down its bets on alternative programs that provide education (combo programs in schools, teacher education, School of Rock, for example) alternative venues for playing (lifelong music playing, Weekend Warriors and so forth), and other innovative efforts.

“As other industries have learned in recent years, it is no longer enough to fill demand. We must help create it, manage it, and then respond to it on customer’s terms.”

D’Addario Joins Forces with Emergenza International Festival
D’Addario & Co. has penned an exclusive sponsorship arrangement with the Emergenza festival, the independent organizer of unsigned bands throughout the world. These festivals take place in 180 cities in 20 countries with more than 10,000 participating bands.

D’Addario, which includes D’Addario strings, Evans Drumheads, and Planet Waves cables, straps, tuners and accessories, has agreed to work with Emergenza to promote and sample its products among the 10,000 up-and-coming artists participating in the festival. In addition, D’Addario will provide Emergenza’s staff with hands-on product training, support for Emergenza’s retail partners, general marketing support through printed materials, Web outreach, and press support.

“Our partnership with Emergenza complements our support and development of up and coming artists from around the world,” says John Roderick, D’Addario’s vice president of product management. “D’Addario’s strong artist relations and education programs matched with Emergenza’s outreach to bands and retailers worldwide reinforces our commitment to bringing music to all while supporting those that make music their life and livelihood.”

The international Emergenza International Music Festival for unsigned bands attracts more than one million people to its concerts every season to watch bands that are given the opportunity and the support to play on a professionally equipped stage.

DiscRevolt Offers Stores Promotional Potential
“If you’re waiting for the next Eddie Van Halen, it’s going to be a long wait,” says Joe Kirk, chief strategist and vice president of business development of

Rb. “But while the labels may be in trouble — CDs are definitely in trouble — music is very much alive and people are continuing to make music.”

DiscRevolt is an innovative music distribution system that while it is currently working with major and minor labels because they control distribution (as of today, at least), has future plans to work with a wide variety of other outlets including MI retailers.

“The cost of creating music has gone down, and for people with small studios it’s not expensive to create an album,” Kirk points out. Distribution is also easier and cheaper if music is downloaded. That leaves the third part of the equation —marketing. He says, “That is what record labels do well. It’s still the place that labels still really excel at [in high-volume-unit situations]. Today a lot of artists are saying they don’t have to sell a million copies. The number of gold records declines every year.” If the artist is more in control and gets a bigger piece of a smaller pie unit-sale-wise, there’s more money going into the hands of the people actually creating the music.

“Most artists today are making their living from live performances anyway. They are not in the Wal-Marts, the Best Buys, the Targets, which is where two-thirds of all music is bought. They are not being played on the radio. All their money is coming from touring, whether it’s a local band playing in a small neighborhood club or the Police, the money is being made at the shows.” And not just ticket prices —selling merchandise is key.

If DiscRevolt has its way, that will include selling their download cards and services. The model is this: you go to a club, hear a band, and are moved by one of their songs. So you go to the merchandise table and you pause … Maybe you don’t want the entire CD, even if the band is only selling it for $10. But for $5, or whatever the artist wants to charge, you can get a card and go to the site to download five songs, including the one you really want.

On a band’s DiscRevolt site, there might be just a few songs, an album’s worth, or 200 songs. The enamored club-goer finds the one that particularly moved him or her and gets it, along with a few others. The site also features the band’s bio, pictures, and links. There’s no monthly fee, just a charge for the cards. A single card provides access to up to 15 downloadable songs. DiscRevolt offers 500 cards for around 50 cents apiece, and going to 2,500 units brings the price down to a quarter a unit. Over 2,000 artists are already using the system and the site.

“The card has the size and feel of a backstage pass, and there’s a collectability factor.” Kirk notes. “I’ve seen kids hanging them on backpacks, rearview mirrors, and even key chains.”

Kirk says he’s convinced the company is onto something: “I watched a kid here in Atlanta sell 150 cards at $5 each and he’s 16!” he laughs. “And he’s not that good!”

For more information, go to discrevolt.com.