Analysis: Lower CD Prices Could Provide a Shot in the Arm

Analysis: Lower CD Prices Could Provide a Shot in the Arm
March 24, 2010 - Retail

By Glenn Peoples, Nashville

When news broke last week that Universal Music Group Distribution will lower CD prices to $10 or less, the immediate expectation was an increase in sales. But lower CD prices should have other benefits as well. And even if other majors don’t immediately mimic UMG’s so-called Velocity program, all sales may still receive a slight boost.

Lower prices are better in sync with labels’ greater emphasis on alternative revenue streams. Multi-rights deals have become the norm, and lower prices will help create more fans and direct them to ticketing, merchandise and artists’ Web sites. As a result, other components of the multi-rights deal will benefit. Of course, the most important revenue stream is still recorded music. So, a drop in revenue related to a price decrease would have to be balanced by an increase in other areas.

Lower prices will also help secure shelf space. In reality, record labels and distributors have two customers: retailers and consumers. The move to lower CD prices is as much about appeasing retailers as enticing consumers. A drop in sales volume is harmful, but a total loss of an account is far worse. If a $10 price points help to keep CDs on the shelves on Wal-Mart, the price drop will have paid for itself even without an uptick in sales. Even losing a major retailer smaller than Wal-Mart would be devastating to labels and distributors.

And, of course, more people buying more music is a more desirable situation than fewer people buying less music. Lower prices create more purchases. As David Pakman, former eMusic CEO, wrote at his blog Disruption, demand for music is elastic. “Higher prices produce lower sales,” he wrote, “lower prices produce higher sales.”

However, a question mark hangs over Velocity: awareness. Not only does price affect sales, but consumer awareness of price is necessary to drive sales. Without consumer awareness, a unilateral price decrease will not have the intended effect. Billboard.biz’s report on UMGD’s pricing change mentioned an increase of over 100% in sales of $10 CDs at Trans World. What it didn’t mention was the effort Trans World put into to awareness and merchandising. For example, a vinyl banner hanging outside an f.y.e. store in Nashville alerted consumers to the low prices. Inside, $10 CDs received prominent placement on end caps. And three of the four majors took part in the test. For these reasons, a single major is not likely to duplicate Trans World’s success.

And yet there is a chance UMGD’s pricing strategy will bear significant fruit. The other three majors may not react with strategies as structured, branded and well communicated as Velocity, but they may soon begin to drop their prices – on some, if not all, price tiers. Universal’s peers did not follow its lead when it launched JumpStart in 2003 and lowered prices, but their frontline and catalog prices eventually came down, too.

In addition, the awareness surrounding Velocity could benefit all CD sales as consumers become more primed to purchase. In 2004, the year Universal launched JumpStart, album sales had a respite from their decade-long downward march. Retail was relatively healthy that year, and labels had some strong releases. But it’s notable that unit sales actually improved 2% the same year JumpStart was launched. That was the only year-over-year improvement since album sales started to fall in 2001.

Updated: UMG To Launch U.S. Pricing Test

Updated: UMG To Launch U.S. Pricing Test

By Ed Christman, N.Y.

The Universal Music Group could rewrite U.S. music pricing when it tests a new frontline pricing structure, which is designed to get single CDs in stores at $10, or below.

Beginning in the second quarter and continuing through most of the year, the company's Velocity program will test lower CD prices. Single CDs will have the suggested list prices of $10, $9, $8, $7 and $6.

To accommodate the lower pricing, UMG labels also plan to step up deluxe versions of albums that can sell at higher prices for the more devout music fans and collectors. UMG is also banking that the lower price points will at the least be offset by increasing CD sales volume.

Most new releases will carry the new price points, although there will be the occasional exception, UMG sources say. At deadline, it was unclear exactly when the program would begin, because Universal Music Group still hadn't relayed that information to accounts.

"We think [the new pricing program] will really bring new life into the physical format," Universal Music Group Distribution president/CEO Jim Urie said.

25% profit margin

Retailers should respond well to the new price points. But the level of their acceptance will likely depend on the profit margins that the new UMG wholesale prices afford. According to sources, the new pricing structure will carry a 25% profit margin, which means that $10 list CDs will wholesale for $7.50; $9 for $6.75, $8 for $6, and so on.

Consequently, retailers who buy from wholesalers will likely be less enthusiastic about the move.

Newbury Comics CEO Mike Dreese gives the initiative "two thumbs up." But he adds that the industry still needs the other major labels and independents to make similar pricing moves for overall CD sales in order to be positively impacted.

"We are happy to see that a major music vendor has made a decision to lower his price substantially, because it's what the customer wants today if we are going to see a viable CD business," Trans World Entertainment CEO Bob Higgins said.

Reaction from industry

On March 16, executives at the other majors were nervous about the UMG move, calling around to accounts for information on the move. Privately, some appeared annoyed by the move. "Why does Universal feel the need to get below $10?" a senior distribution executive at a competing major asked.

Yet merchants have long clamored that lower pricing will prolong the life of the CD, which is down 15.4% so far this year. Album sales were down 18.2% last year, and 19.7% in 2008, when CD sales totaled 360.6 million, as opposed to the 706.3 million units CDs scanned in 2000.

In response to declining sales, the majors and indies have responded by lowering catalog pricing across the board -- either formally, like Sony Music Entertainment's Accel program does (Billboard, Sept. 5), or through promotional vehicles like UMG's XL promotion -- to bring wholesale cost price down to the $7-$8 range. Frontline pricing, however, still remains a mixed bag, with UMG main wholesale price point at $10.35; Sony at $10.50, EMI at $12.04 and the Warner Music Group at $12.05.

Between all the retail circulars touting hit titles at $9.99, and iTunes selling albums at that same price point, it became conventional wisdom among merchants that $10 is the magic price point that will induce consumers to buy more CDs.

The new UMG pricing structure for CDs won’t impact its digital pricing; the company plans to keep its current pricing for digital.

Pricing programs

UMG was the first major to address declining sales when it initiated Jumpstart pricing in September 2003, which put frontline pricing at $10.35. But the other majors condemned that move and refused to lower prices until years later.

As CD sales continued its decline, merchants began renewed requests for the labels to respond yet again beyond the catalog pricing moves, JumpStart and Accel. In the last few months, Trans World Entertainment began testing the $9.99 price point in over 100 stores, while Wal-Mart has been telling the majors to release shorter albums at lower prices more frequently.

The Trans World test -- in which most independents and every major except for the Warner Music Group participated -- produced units sales increase of more than 100%, according to label executives who participated in the tests. The Trans World test helped sell the new pricing model to the Universal labels, sources say.

On the reluctance by other majors to so far address the $10 retail price point issue, one source says, "The definition of idiocy is doing the same thing over and over and expecting a different result. Things are not going to get better for CD sales unless the price point is addressed. One thing that the Trans World test shows for sure, $10 will drive sales and traffic."

SUPERMARKET SWEEP

SUPERMARKET SWEEP

American-style retail album exclusives could become a permanent U.K. fixture if an initiative by the country's largest mass merchant Tesco pays off.

Tesco became the first U.K. retailer to offer a major pop/rock act album exclusive when it began selling Simply Red's 12-track collection "Songs of Love" Feb. 28 in about 800 of its biggest stores, 200 smaller outlets and at TescoEntertainment.com. Tesco entertainment director Rob Salter says the chain expects to handle three to four music exclusives per year, initially focusing on established acts without a current label.

While U.K. retailers have previously offered exclusives on classical albums and pop singles—including a Tesco deal for Katie Melua & Eva Cassidy's 2007 No. 1 single "What a Wonderful World (Dramatico)—the Simply Red deal has the beleaguered independent retail sector worried. "I can see HMV following suit, and that would be a complete nightmare," says Kevin Buckle, owner of Edinburgh, Scotland, indie Avalanche Records.

HMV (the United Kingdom's market leader with a 24.1% share of album sales by revenue in 2008, according to the BPI's latest figures) declined to comment for this story but would seem well-placed to strike exclusive deals. Its recent acquisition of MAMA Group includes an artist management roster featuring the likes of Franz Ferdinand and Kaiser Chiefs. The BPI noted that Tesco had a 10.5% albums market share in 2008.

Bruce Kirkland, president of Los Angeles-based music and media group Tsunami Entertainment, brokered the Simply Red deal for Tesco with Simply Red's Silentway Management, having previously negotiated deals with U.S. retailer Target for Pearl Jam's 2009 album "Backspacer" and Christina Aguilera's 2008 hits collection "Keeps Gettin' Better."

While Kirkland acknowledges that U.S. indie retailers have long objected to exclusives, he insists that "this is not about putting other retailers out of business."

But Richard Sefton, sales director at independent distributor PIAS, says Tesco's Simply Red deal "sets a precedent people will look at carefully." While Sefton expects other retailers will follow suit, he says PIAS would be "uncomfortable going into any exclusive agreement."

That echoes the views of many other indie retailers in the United Kingdom, currently awaiting the spring launch of U.S. mass merchant Best Buy—a major proponent of American retailer exclusives.

Universal Music U.K. commercial division managing director Brian Rose declined to comment for this report, but told Billboard in January that his company wasn't interested in retail exclusives. "It's not a great message to the consumer," he said. "It's confusing if they can only get a record at such-and-such a retailer."

Sony Music U.K. commercial sales group senior VP Nicola Tuer says Sony welcomes "any initiative that demonstrates commitment to music." EMI didn't respond to requests for comment.

"Songs of Love" contains 10 previously released tracks that were originally recorded for East West/Warner Music but are now owned by a joint venture between Simply Red founder Mick Hucknall and Warner. Since 2000, Simply Red's new material has been issued through Hucknall's own company SimplyRed.com. Tesco's Salter says Warner wasn't directly involved in negotiating the Tesco deal.

Salter says Tesco hopes to sell 100,000 units of "Songs of Love," which debuted at No. 25 on this week's U.K. albums chart, selling 9,000 units in its first week, according to the Official Charts Co.

Kim Bayley, director general of the Entertainment Retailers Assn., says its members, including Tesco, abide by an "informal compliance" outlawing exclusives on front-line product. With only two new tracks, "Songs of Love" doesn't constitute a front-line release, Bayley says. However, she concedes that "inevitably retailers are going to push at the boundaries as sales decline," adding that the ERA's board will discuss the issue.

Tsunami's Kirkland, however, insists that any U.K. opposition is misplaced.

"There's no reason to resist these things," he says. "Music is the beneficiary." ••••

Gen X, Y Pave The Way To Economic Recovery

Gen X, Y Pave The Way To Economic Recovery


By Elaine Wong, Brandweek

Baby boomers led the U.S. out of a downturn in the last two recessions, but this time around, it will be Gen Xers and millennials paving the way to economic recovery, according to a new report issued by PricewaterhouseCoopers today.

The study -- called “The New Consumer Behavior Paradigm: Permanent or Fleeting?” -- looks at how consumer spending has changed in the last two years. As the nation shifts into recovery mode (February’s unemployment rate held steady at 9.7 percent, per Department of Labor stats), retailers and packaged goods makers can expect the emergence of a more cost- and value-focused consumer. This consumer is also less likely to be driven by “rampant, deal-seeking,” the study found.

When the economy first hit rock bottom, cash-strapped consumers jumped into a frantic, bargain-seeking mode, said Lisa Feigen Dugal, PricewaterhouseCoopers’ U.S. retail and consumer practice advisory leader. Now, that intense focus on meeting budgets and saving any additional cash “will give way to more deliberate and purposeful” spending, Feigen Dugal said.

Baby boomers, however, will not be at the forefront of the economic recovery. That’s because the recession has eaten into this demographic’s savings and retirement accounts, reducing boomers’ ability to spend, Feigen Dugal explained.

The shift is an opportunity for marketers to court Gen Xers and Gen Yers via mobile technologies -- including coupon applications, recipe and grocery shopping tools, and comparison-shopping sites, Feigen Dugal said. (Digital couponing is at an all-time high, with the former surpassing print or newspaper coupons by a factor of 10 to 1, per Coupons.com.)

Though Gen Xers and Gen Yers may have less savings income to spend, the latter is “entering its peak earning years,” while millennials have a higher propensity to spend their dollars, Feigen Dugal said. In addition, millennials tend to embrace the latest mobile technology much quicker. Advertisers can now run couponing offers on iPhones and other smartphones.

While there is now more wiggle room for discretionary purchases, the recession has left a permanent mark on shoppers of all ages. The study found that consumers are more likely take into consideration things they “truly need.”

IFPI: $1 Million To Break An Act

IFPI: $1 Million To Break An Act

By Andre Paine, London

The IFPI has published a new report outlining the record labels' investment in music talent, which it says now reaches around $5 billion a year. That $5 billion includes A&R development and marketing, and represents around 30% of sales revenue.

John Kennedy, chairman and chief executive of IFPI, said in a briefing at its London HQ today (March 9) that the recorded music industry invested a greater proportion in research and development than virtually all other industries. Record companies invest an estimated 16% of sales revenue in A&R work, and the report states that one in four artists on label rosters were signed in the last 12 months.

Kennedy also spoke about the "myth" that artists no longer need record labels, and challenged anyone to name a new act that had broken through to become a major success without the support of a label.

The eye-catching figure in the "Investing In Music" report is the cost of breaking an artist, which the IFPI says is around $1 million. That typically comprises:

Advance - $200,000

Recording - $200,000

Three videos - $200,000

Tour support - $100,000

Promotion and marketing - $300,000

Kennedy attempted to avoid touching on the piracy issue for once, he said, but did refer to its impact on labels' investment.

"It's becoming more and more difficult to sustain that level of investment given the problems we face," he said.

The main debate during the briefing centered on the difference between breaking an act, and an artist recouping on the investment and becoming profitable for a label.

Breaking an act depends on hits which generate buzz and can build an artist domestically and then internationally with investment in tour support, said Decca managing director Dickon Stainer.

"It takes a long time to enter the consciousness of the global public," he said.

Profitability comes some while after an act has broken through with a hit. Columbia Records U.K. managing director Mike Smith noted that a label needs to continue "investing often hundreds of thousands of pounds to keep the campaign going."

"Often profitability is disregarded initially in order that you can achieve chart success," added Smith. As someone who worked in music publishing for 18 years, he acknowledged the "great risks" taken in the recorded music business.

"You can sell 500,000 records or sometimes a million and not be profitable," he added. The formula depends on variables such as cost of music videos, but Smith said that platinum sales in the U.K. (300,000) could lead to profitability if other income such as synch licensing and brand partnerships were taken into account in addition to record sales.

Once you reach 600,000 sales, said Smith, then the act should become genuinely "lucrative." Columbia's BRIT Award winning U.K. rock act Kasabian recently surpassed that sales total in Britain.

Smith said the goal was long-term profitability from a successful catalog. He was not concerned about some acts and their management taking more control by licensing to labels - U.K. platinum act Mumford & Sons is one new band that has gone that route with Universal - and possibly denying a major that catalog further down the line.

"What people really want is investment," said Kennedy, who said artists on licensing deals would often renew with a successful label partner anyway.

Both Kennedy and Smith said that the $1 million estimate to break an artist was a "conservative" figure and that it could be double that in some cases. Stainer estimates that it costs $1.5 million to break a jazz or classical act internationally. The Universal label had international success with Melody Gardot last year.

Smith added that performances on televised shows such as the BRIT Awards can be expensive to stage, with labels picking up bills of more than £100,000 ($150,000) for spectacular one-off performances, but he noted that Mark Ronson's appearance during the 2008 ceremony helped build the artist to more than 1 million sales.

Smith added that labels take tougher decisions now regarding which acts they stick with and develop. He said the success rate of breaking new artists was now around one in five compared to one in 10 in previous years.

It can even be positive for an artist to be dropped and successfully re-focus on a career with another label, Smith commented.

"The industry does recycle artists," he said. "Often the best thing that can happen to an artist is to be dropped."

U.K.-based Danish pop act Alphabeat has entered the top 40 with new set "The Beat Is" (Fascination/Universal) after moving from EMI.

Kennedy also laughed off reports that Lily Allen said she is taking a break from music and that it is has never been a big earner for her. Kennedy believes the U.K. pop singer is almost certain to make a new record at some point.

There are more than 4,000 artists on major record companies' rosters combined, and many thousands more on independent labels, the report said. It added that recorded music has a massive economic "ripple effect," helping generate a broader music sector, including live music, radio, publishing and audio equipment, estimated to be worth $160 billion annually.

IFPI estimates that more than 2 million people are employed globally in this broader music economy.

The Future Of Digital Content: Not All Will Be Free

The Future Of Digital Content: Not All Will Be Free

By Glenn Peoples, L.A.

Andrew Zolli, a self-proclaimed futurist and executive director of the PopTech network and conference, has quite a mea culpa in the latest issue of Newsweek. Zolli preached the virtues of free digital content for many years. Upon reflection, he doesn't think that was great advice.

Unfortunately, as we've seen since, for companies whose core product is content -- like every newspaper and magazine you read, including this one -- the idea that we Internet visionaries sold is a total load of crap. We persuaded executives to compete with themselves online by setting up Web sites that offered for free the same content their staffs labored so strenuously to produce and sell in their print publications. The theory was that companies were supposed to make back the money by, uh, "monetizing the attention economy," or some other similarly vaporous concept, that meant either charging customers later on, or selling advertisements, or both.

They bought in, and now the Internet is pulverizing them...Following our lead, companies have now trained a generation of young people to never, ever, ever expect to pay for content on a laptop or desktop.

Zolli's article came two weeks after Jack Shafer's "Not All Information Wants to Be Free" at Slate looked at the slow shift to paid online content. The Internet's early years had many attempts -- the New York Times' TimesSelect, the Los Angeles Times' CalendarLive and Inside.com, to name a few.

These failures tell us much about what customers refused to pay for on the Web. But they tell us little about what customers will pay for. Not all successful paid sites are alike, but they all share at least one of these attributes: 1) They are so amazing as to be irreplaceable. 2) They are beautifully designed and executed and extremely easy to use. 3) They are stupendously authoritative.

This discussion has been extended to recorded music. Futurists like to tell record labels to monetize scarcity and worry less about abundant digital copies. That implies artists and labels should charge for items like T-shirts, designer purses, live concerts, VIP treatment and synchronizations. Artists would no longer be just artists. They would be entrepreneurs.

Yet it's clear people will continue to pay even when it's not absolutely required. Radiohead proved people will pay when they could simply take it for free. The band's album "In Rainbows" could have been teens buy less than adults, but they do pay for music.

In some ways, encouraging businesses to monetize awareness is actually good advice, because it puts the focus on products and features that add value to music. In the digital age, much of music's value will come from the quality of the services built around it.

Convenience, one of iTunes' hallmarks, creates value for music. Helpful functions like recommendations also create value. "While it's easy to acquire the entire U2 discography for free on a file-sharing site," wrote Shafer, "it's still easier and faster to use iTunes to search for and purchase the tracks you really want."

The future of digital content may have to reside outside the Web browser. Shafer argues people have been conditioned to think any content delivered by a browser should be free. Zolli agrees that new platforms will play an important role in future of digital content.

But this is not quite the apocalypse. Many new digital platforms are brewing, and early on in the development of each one there will be a battle for the business model -- a fight to figure out who will pay. The advent of every new device is another chance to turn it all around.

Remember that we're only about 15 years into the Internet. After that period of time, Shafer writes, paid television was practically non-existent. Paid radio took many decades to appear.

Analysis: Streaming's Impact On Download Sales

Analysis: Streaming's Impact On Download Sales

By Glenn Peoples, L.A.

What does streaming music do to download sales? It's a question that gets to the heart of the future music industry.

Today, downloads are the dominant source of digital revenue, but far more revenue will come from webcasting and on-demand music services down the road. In the meantime, labels will worry that free, on-demand streaming and non-interactive webcasts have cannibalizing effects on the purchases of digital downloads. Some cannibalization is natural, but the displacement of high value behavior for a lower value one is problematic. Rather than encourage sales (and more revenue), streaming may sometimes be just free listening.

Streaming's impact on consumer behavior has been discussed -- and doubted by some -- since NPD Group's Russ Crupnick gave a presentation at last weeks' Digital Music Forum in New York. As has been reported, Crupnick said free, on-demand music services result in 13% fewer digital download purchases, while non-interactive services result in 41% more digital download purchases. (Billboard has not yet received a clarification on the wording of Crupnick's statements and assumes they were accurately reported.)

If we use Crupnick's numbers, we see the changes in downloading from on-demand and webcasting are almost a wash. If we assume non-interactive webcasts caused listeners to purchase 41% more downloads, and on-demand services caused users to purchase 10% fewer downloads, there was a 4.9% increase in download sales 2009, based on estimates from Nielsen's @Plan.





Assuming changes in downloading similar to those mentioned by Crupnick, the trade value of 2009 downloads is $1.461 billion. (That was roughly the actual trade value of downloads last year.) If there were no changes in purchases due to on-demand and interactive streaming, the value would have been $1.390 billion. Billboard used Nielsen's @Plan to estimate the relative impacts of the two opposing forces on 2009 digital download sales.

What if both on-demand and non-interactive resulted in a 10% increase in purchases? Download revenue would have been $1.429 billion, slightly less than actual trade revenue. At -10% for both, revenue would have dropped to $1.351 billion. A 20% increase due to non-interactive matched with a -20% drop for on-demand results in $1.311 billion.

A few notes:
- According to @Plan, only about one-fourth to one-fifth of online adults who use MySpace Music (in this example the proxy for free, on-demand services) and online radio have actually bought a digital download in the last six months.

- The vast majority of download buyers are therefore assumed not to be affected by on-demand or non-interactive services. Digital service providers may dispute these numbers based on customer surveys or internal data, and are welcome to share their opinions. Obviously, if more webcast listeners are assumed to buy digital downloads, the overall change would be much greater than is presented here.

- The estimated trade value of digital downloads purchased in the United States in 2009 was $1.461 billion. That figure was assumed to be the result of the two changes in consumer behavior described by Crupnick. No other reasons for changes in behavior were taken into account in this example.

- Billboard assumes users of on-demand services and non-interactive services are exclusive to one another and buy digital downloads at the same rate.

Bands used to focus on making music

Emerging Artists Too Self-Important for Social Media? http://tnw.to/15l9L

The music industry has felt threatened for a while now — it’s easier than ever to get a hold of music legally, and illegally.

New acts signing to major, as well as indie labels, gladly tell execs there that they’ll make music, but refuse to get into social networking — mainly Facebook and Twitter. Many acts will quickly sign up for a MySpace profile, as the platform is targeted at them — with extended profile customization and the ability to add tracks — and many stop there.

But let’s get real here, MySpace isn’t exactly ideal for networking. At least, not by itself. If you’re an act refusing to participate in social networking — think again — keeping fans at arm’s length is no longer an option.

Sure, some musicians want to work on their music exclusively, but social networking doesn’t have to take up their time, there just seems to be this bad stereotype to it. Artists have a responsibility to engage with their audience, and touring is not the only way to accomplish that.

Cameo Carlson, executive vice president at Universal Motown Republic Group, was “shocked to find out how many twentysomethings aren’t interested in social networking,” and she’s spot on.

Only 9% of users across social networking sites are aged 18 to 24. The age group with the highest usage? The 35 to 44 age group, with 25%. The 17 and under age group seems to do much better, at 15%, but unless your act is part of the age group and/or the music appeals to the age group, it’s pointless.

So What Do I Do?

As an act, does it mean you have to turn into a salesman? Not at all. Simply engage your fans. It’s amazing supplemental promotion to what your label is already doing! How you do it is up to you, and what’s right for your act, but here are a few ideas that might kickstart your thinking:

• Update your Twitter/Facebook with pictures. Behind the scenes peeks at photoshoots, backstage, everyday touring shots, whatever. Make your audience feel like they’re there with you!
• Contests. People love free stuff! Think of ways you can get your audience passionate about that upcoming show. Reggae musician Matisyahu likes to get in touch with local fans through Twitter when he’s touring in the area. He even gives out free tickets to his shows randomly through shout-outs.
• Link to your new music, or progress on a track. It’s a great way to get the word out, and fans feel special when they get that sneak peek.
• Be real. You don’t have to be a power-user, but from a fan’s point of view, it’s nice to read some real thoughts from musicians. Though it may seem unimportant, fans love to be in the loop and feel like they really know their favorite musician beyond the music.

Excuses, Excuses.

“Social networking is overrated.”

What, are you stuck in 2004? Get with the program. This is the worst excuse in the book, and I shouldn’t have to devote any time to justifying it with statistics.

“I thought the very reason I signed on with a record label was to let them do all the marketing, social engagements, etc.”

In some cases, I can see certain acts hiring someone else to manage their social media presence, if really necessary. But labels usually manage many musicians, and expecting them to manage your social media presence, as well as other artists’, can get impersonal. If you do need to hire someone to do the social media dirty work, then be selective about who it is.

“The Beatles didn’t tweet.”

Yeah, and we’re not buying vinyls en masse anymore. Times change. Society changes. The ways in which we consume information, news and music is drastically different now, and in many ways, the bar is raised. Times are tough, and the music industry is extremely competitive, so you need to set yourself apart from the rest.

“Serious musicians like me don’t want/have time to do this social networking crap.”

First, get off your high horse, and open your eyes. There are musicians on major labels with huge followings — and talent — that maintain their networks personally. Ingrid Michaelson, Rivers Cuomo of Weezer, Sara Bareilles, Dave Matthews, Bloc Party, and even Willie Nelson personally run their Twitter accounts.

It’s Not Hard, Really.

If a new band really wants to avoid social marketing and let their music speak for itself, then they can upload their amazing album to iTunes, refuse to promote it, and see what happens. Most new artists can’t afford the price of a label promoting them out the wazoo, and social media allows for a very successful DIY approach.

Social media is here for the long-term, and it’s already the standard in the entertainment business. After all, those fans made you, they support you, go to your concerts, listen to your music — the least you can do is reach out. You’ll be pleasantly surprised at what you get in return for something so simple.

Analysis: How Important Is Social Media?

Analysis: How Important Is Social Media?

By Glenn Peoples, L.A.

How important is social media in the development of artists?

At Digital Music Forum, Universal Music Group executive VP Cameo Carlson said she was surprised so many twentysomethings are not interested in social networking. Daniel Glass, founder of indie label Glassnote Records, told the audience he once chose not to sign an act that showed apathy about social networking.

The problem with trying to figure out the value of social media in music is that outliers get all the attention. For every Taylor Swift and John Mayer there are scores of artists with very different strategies – or not much of a strategy.

Here’s an outlier you might not know about: Joanna Newsom, a California-based singer-songwriter. Newsom is far from a superstar, but she has attained success on a smaller scale. Her last two albums, both put out by Drag City, have each sold a bit over 70,000 units, according to Nielsen SoundScan. She tours the U.S. playing clubs and small theaters. In Europe she will perform at the All Tomorrow’s Parties festival in the U.K. as well as the Royal Dramatic Theater in Stockholm, Sweden.

Newsom is the other kind of outlier. She has risen to popularity in the social networking age with only the most basic of pages at the Web site of her label, Drag City. She does not have an official MySpace page, a Twitter page, a Facebook page, an official artist web site or a blog. She has nothing but a Wikipedia page, some unofficial sites kept by fans and a 9.2 out of ten from Pitchfork on her new album, Have One On Me (not to mention a 9.4 on her previous full-length).

Even though her voice is absent, Newsom is hardly invisible online. Her MP3s are on music blogs and videos can be found on YouTube. Her label is doing its job by getting reviews and features. And NPR is offering a free stream of her new album – which leads to mentions on Twitter.

Social media is about sharing. In music, word of mouth is the most powerful driver of awareness. If fans are allowed to share music and videos online, it may not much matter that the artist is trying to direct all that traffic. A simple, effective social media strategy may be to make really good music, give the fans the ability to spread the word about that music and just step out of their way. It’s worked for Newsom.

Analysis: The Potential In Mini-Albums

Analysis: The Potential In Mini-Albums

As Billboard previously reported, Blake Shelton’s new release, "Hillbilly Bone," a six-song mini-album, hits stores today. USA Today is taking note of the uptick in country mini-albums (or EPs, or collections that generally have fewer than ten songs). Luke Bryan, the newspaper points out, released his second “Spring Break” digital EP today. And "country's Josh Thompson and American Idol's Jason Castro have released digital EPs in anticipation of full albums."

Shelton’s six-song CD, which Warner Nashville will put in physical retailers, represents a far greater leap of faith and a bigger shift in strategy than a digital-only release. Not all albums will be shortened to six songs, but expect to see more mini-albums on store shelves as labels and retailers try to find ways to offer music at lower prices.

This mini-album experiment could help fix two problems. First, it could help keep record labels on the store shelves on retailers wary of falling CD sales. Second, cheaper albums will probably do more to lure buyers who would have otherwise bought a single track. The current gap between track and album is about $7.70 – a $9.99 digital album price minus $1.29 track price. At iTunes, Shelton’s Hillybilly Bone costs $5.99 while each track costs $1.29. That’s a difference of $4.70. If the price gap is reduced to the $4 to $5 range, labels may be better able to convert track buyers to album buyers.

A look at the numbers show the mini-album idea has potential. If Shelton released two $5.99 mini-albums instead of one $9.99 album, Warner Nashville will have to sell 167 combined units of the two mini-albums for every 100 units of full album sales to break even. (Wholesale costs for digital product, not physical, were used in those quick calculations.) That’s very doable, especially if the lower price point causes the track-to-album conversion rate to improve. On the expense side, however, labels will experience greater expense in putting out two releases instead of one. But even considering the higher expenses, and even if the 167/100 ratio is not reached, mini-albums could help labels achieve the incalculable benefit of keeping the Walmarts of the world interested in their music.