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Songwriters Guild of America |
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Audio Engineering Society |
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American Federation of Musicians |
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Screen Actors Guild/American Federation of Television and Recording Arts |
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American Guild of Musical Artist |
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American Guild of Variety Artists |
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Why union membership and bargaining power has decreased over recent years? |
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Dif?culty in attracting many of the new, young professionals State and national laws restricting certain kinds of collective bargaining agreements Continuing displacement of live performances with recorded music Increasing displacement of live musicians by electronic instruments Importation of music recorded abroad Increasing prevalence of nonunion performances, live and recorded |
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Typical contractual reductions to artist royalties? |
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Pre-2006: things calculated on suggested retail price packaging- relates to physical packaging, takes 25% of retail deduction was justified that artist should only get royalties off record, not the package Free goods- labels would deduct 10-15% off unit shipped to cover cost of incentives and discounts (giving free records to distributors) if its given away, artist can’t get any royalties Labels would raise wholesale price and break even to distributor- now calculate on wholesale Breakage- up to 10% off royalty bearing sales for breakage during shipment- most people negotiate it out of contract New technology- attempt to discount 15-25% to cover costs of investment in new technology- charged artist to help pay for new factories, ability to embrace new technology Marketing split 50/50 Video cost- 100% from video royalties, 50% from audio |
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How a 360-deal differs from a traditional artist recording agreement? |
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Instead of just getting compensation off of record sales, record labels have now developed a system in which they take a cut from every major revenue source besides Label handles many non-recording duties with a 360 deal |
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Sony Music Entertainment subsidiaries? |
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Epic/Columbia/RCA Records |
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Warner Music Group subsidiaries? |
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Electra/Atlantic/Rhino/Warner Bros |
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Universal Music Group subsidiaries? |
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Island Def Jam/Interscope/Motown/The Verve Music Group/Universal Music Enterprises |
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Blue Note/Capitol/EMI Records/Virgin Record/Parlophone |
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The competitive advantages of an artist working with a major and independent record label? |
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MAJOR PROS- In-house distribution Deep Pockets Marketing/promotion Connections- resources Larger advances Stability
INDY PROS- More individual attention Larger promotional time period Creative control Involved in what’s new and popular Flexible Own more of your music |
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Components of an effective record marketing plan? |
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4 P’s – Product- what is your product? How does it satisfy demand? price- Pricing strategy place- distribution, and to where? Promotion- who are you promoting to? Define your goals- make sure they are realistic goals, attainable Define who you are going to market to, also who your market is- find a unique selling position- Don’t try to be everything to everyone made around an album release artist/album description- taken from artist bio, what is the record about, is there a theme to the record press component- album reviews, interviews, ad component online/video- involves artist website, social media distribution/retail portion of marketing plan, where is product located tour component- primary driver of record sales, primary promotion, help marketers know when an artist is available promotional merch- swag- free stuff any additional opportunities- cross promotion, events, AMA’s, charity event |
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Types of record promotion commonly utilized in the record industry? |
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Publicity and Advertisement |
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The four (4) major record label distributors that provide physical distribution service for the majority of independent record labels? |
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UMG- Fontana EMI- Caroline Sony- Red Music Warner- ADA alternative distribution alliance |
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Different distribution fee models used in Digital Music Aggregation? |
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10/15% of sale Subscriptions- flat fee for subscription example companies- cd baby- physical and digital tunecore, reverb nation, the orchard |
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Differing methodologies utilized in music market research? |
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Point of Sale Research Focus Group Research |
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survey of radio and TV, digitally listens to broadcasts |
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music identifier used by ASCAP |
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Landmark Digital Services |
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owned by BMI, digitally listens to music |
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serves radio, TV, cable (Neilson bought Arbitron) |
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measures growth and popularity of brands across social media, radio, websites |
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POS, internet broadcast, streaming services, file sharing, used by PRO’s |
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The four (4) broad categories of Internet-based tools available to independent musicians as described in Chapter 26 of the class textbook? |
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Sales/Promotion- helps artist decide how to connect with fans and potential fans Financing- self financing or ‘crowdfunding’ Live Touring- tools to help promote live performance online Alternate Revenue Source- synch licensing |
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Discuss how developments in digital recording and digital distribution have affected the RECORDING industry. How has this affected the traditional record label sales model? |
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Physical cd’s have largely gone away Sales have shifted to digital Labels are forced to earn money in ways other than just record sales (360 deals) Shifted into pull marketing where consumers decide what they want, and the labels no longer used the retailers and radio as primary buyers Labels were forced to get to know their buyers (the masses) |
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Mistake 1 – The CD Longbox |
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Cd’s were packaged in a long cardboard thing In order to fit cases where records were kept 6” x 12” Sony and Phillips were pushing to switch from LP to CD production Retired in 1993 Split packaging cost savings Symbolic of a decentralized music industry This was stupid, didn’t make sense for long term, one industry being stupid and didn’t want to change |
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Mistake 2 – Independent Radio Promotion (1990s-2000s) |
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Telecommunication act of 1996 allows corporations to own more then one radio station in the same market Like a drug for major record label Promoters used gifts, tickets to events, swag, gift bags, copies of records. Payola Radio stations make deal that if artist do services for them that they’ll get more consideration for their record 2005 becomes an issue. Elliot Spitzer brought a law suit against Sony/BMG said they knew about Payloa threw 3rd party another payola blush at a time that it didn’t need it reminded a poor image for labels forget you im going to steal your music |
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Mistake 3 – Digital Audio Tape (1980s-1992) |
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Developed in the mid 1980’s by SONY Another configuration along side CD Not a replacement Record labels insisted that DAT players come out with copy protection hardware Didn’t work Serial copy management system AHRA created exception between computer manufactures and CD roms Nothing was solved, one burdened went to another place and they lost much more due to it |
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Mistake 4 – Killing the Single (1980s-1990s) |
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Built largely on album sale Singles were used for promotion Sent to radio stations for them sample and see if they want to buy the whole album 80-90’s phase singles out of the market Industry has not built consumer interest of a model |
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Mistake 5 – Pumping up the Big Box Retailers (1990s) |
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Walmart, Target, Best Buy Sold CD’s in their store to supplement their stereo equipment Began selling CD’s as a loss leader to stimulate the sales of something else 1996 best buy and walmart had 25% of cd sellers schemes to have labels pay them to sell cds in their store MAP, minimum advertised price 2000 Declared it was price fixing and it is ILLEGAL 1996-99 consumers paid 480 Mil more then they had to served to devalue music in the customer perspective sent dedicated record stores like tower records into bankruptcy another example of the industry chasing short term profits at the overall long term expense of the industry killed the record store |
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Mistake 6 – The Rise and Fall of Napster (1998-2001) |
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a place to trade pirated music = no monetization; listeners felt entitled to music after spending $20 on albums. By 2000, there were over 20 million users. Napster lost trial in court based on 1 e-mail admitting users were trading pirated music. Labels bogged down on file sharing services and many deals they already had didn’t include online distribution. by 2002, Napster went bankrupt |
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Mistake 7 – Rise of iTunes (2002-2003) |
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Apple had integrated systems that worked and were easy to use, encryption that prevented music from being played on more than 3 computers. Steve jobs pledged $30 mil of marketing per quarter. 2003 – store launched with 200k songs @ $0.99 each. Apple really made their money by selling iPods. iTunes encouraged selling singles over albums. 2007 – employed 3 tiered pricing – $1.29, $0.99, $0.69 |
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Mistake 8 – The RIAA Lawsuits (2003-2008) |
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Targeted 18,000 users. Everyone who got sued settled outside of court for a few thousand dollars rather than paying copyright infringement fees. This didn’t produce a huge return on margin, it just vilified the industry and martyred those who were targeted |
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Due to a number of contractual provisions within an artist-recording contract, an artist’s overall royalty account may remain in an unrecouped position even with a successful selling album. Explain how this can happen. Be specific. |
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Labels see it similar to joint venture Production and overhead costs are paid by partners (artist +label) Justified because from record label perspective, they put up financial risk Indentured servitude (artists opinion) we only make money off record sales, while artist has other revenue streams (labels opinion) When royalties come in from record sales, pays off advance Royalty reserve account- all records sold on consignment basis- all records are 100% returnable Not sure if sold to wholesaler-sold to retailer- records might come back, and distributor needs money back Label holds royalties to see if albums come back Hold 35-50% of royalties in a reserve account for up to two years Label earns interest on your money being held No reserves on digital sales- no returns Acts as a buffer for the label against large financial loss |
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As the recording industry continues to invest in digital distribution models, what are the current challenges faced by both the industry and the consumer with the widespread adoption of this distribution method? |
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Cannibalization of record sales- causes decrease in record sales Too many choices in who to invest in Startups want discounted rates from major record labels, in turn, labels want equity in company- creates issue when company goes public, copyright owners don’t get paid, label does Growing limitations on bandwidth |
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Discuss the rise of market research and analytics within the record industry. How has this trend changed record industry marketing practices since the 1990s? |
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Created a precise way to measure sales data. Prior it was what the charts said. Usually measured by airplay, spins (Was Old system). Shipped, Sold, Returned was old system. POS transactions- what is actually sold Tracked by barcodes Surveys, interviews, focus groups Record labels/marketing firms/artists use data to make more efficient business decisions/promoters/booking agents |
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What are the pros and cons of using the “freemium” pricing model? Discuss the long-term implications of this pricing strategy on the recording industry. |
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Artists literally give away their music for free, or allow consumers to decide how much they want to pay Decided that 60% of consumers paid for album at 6$ an album average Created large amount of consumer awareness that promoted the album for sales through other venues and proved that album prices could be dynamic Consumes are willing to pay for recorded content if they feel they are getting a good value for their money Could see majority of artists switching to this form of pricing and really cutting the majors out of the picture in terms of what is needed from them Pro’s Generates interest in your brand Keep all the money Good way to gain fans Con’s A lot of people don’t pay You don’t know what people think is fair in relation to picking what price to charge- you could sell yourself short Might not have a large enough fan base to be successful Might only work for large artists |
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