Sunday, April 06, 2008

New Business Models in the Music Industry Focus on the Role of Internet Marketing in Turning a Profit

Last Thursday, Myspace announced that it had teamed up with Universal Music Group, Sony BMG Music Entertainment and Warner Music Group for a new online music venture which will allow visitors to browse the entire digital catalogs of all three music companies, as well as stream songs and purchase downloads.
Meanwhile, rapper Jay-Z, like Madonna and U2 before him, has signed a major ($150 million) deal with the concert promoter LiveNation, leaving behind his current record label, Def Jam Recordings, which is owned by Universal Music Group.
Both events have led to a great deal of speculation in the media as to what sort of structural changes are signified by these new business models, and how they will ultimately effect the overall functioning of the music industry.
On Valleywag, Jackson West argues that Myspace Music will fail for the very reasons that LiveNation will succeed: digital music is no longer a “product” but really just a form of advertisement for “branded events and merchandise”. I find this notion deeply problematic from the point of the view of the artist, whose product is, or at least should be, some form of art, and not a “brand”.
However, LiveNation is not the only one guilty of exploiting music as a vehicle for advertising. MySpace co-founder Chris DeWolfe tells PaidContent.org: “We will be able to develop many new streams of revenue, [. . .] “MySpace is a global company with 26 offices around the world and over 500 people dedicated to ad sales,” he said. The music will provide a foundation for display ads, streaming, music sales, ring tones and other forms of merchandising”.

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